PDD Holdings Inc., the parent company of the popular e-commerce platform Temu, has dismissed a number of employees from its Shanghai government relations team following a physical altercation with Chinese regulators, according to sources familiar with the situation.
The layoffs of dozens of staff members come as PDD seeks to manage the fallout from the rare and confrontational incident earlier this month, which has intensified regulatory scrutiny of the company.
A separate government relations team not involved in the fight remains employed at PDD, the sources noted, speaking on condition of anonymity due to the sensitivity of the matter.
Reports indicate that at least two physical altercations took place at PDD’s Shanghai offices involving staff members and officials from the State Administration for Market Regulation (SAMR). The inspectors were conducting an investigation into allegations of fraudulent deliveries on PDD’s platform, as reported by Bloomberg News last week. Following the incident, several arrests were made, including some company executives, according to sources.
During the inspection, regulators reportedly requested access to PDD’s transaction data—a highly sensitive area containing proprietary information about the company’s operations and customer data, which is generally not publicly available.
It is uncertain what actions the SAMR might take in response to the incident, but such physical confrontations between regulators and major Chinese companies are highly unusual, despite existing tensions.
Neither PDD nor the SAMR has issued official comments on the matter.
Initially, Caixin reported that multiple employees within PDD’s government relations team had lost their jobs due to the altercation, but the article has since been removed from the publication’s website. Reports of the incident on other platforms such as Netease and Sina have also been taken down, highlighting the delicacy of the situation.
The incident raises concerns that PDD could face increased scrutiny from the SAMR, which possesses broad investigative powers. The agency previously led a high-profile antitrust investigation into Alibaba in 2020, resulting in a sector-wide crackdown.
Relations between Chinese authorities and large firms only loosened in February this year, following a meeting between President Xi Jinping and entrepreneurs including Alibaba’s Jack Ma.
This volatile environment poses challenges for PDD, which recently warned of a slowdown in the fiercely competitive Chinese consumer market, where rivals like Alibaba and JD.com have intensified their efforts.
While PDD is widely recognized as the creator of Temu and the Pinduoduo platform within China, the company has ambitions to expand further into the US and European markets—raising concerns among international regulators.
In fact, around the same time officials visited PDD’s Shanghai offices, European competition authorities raided the Dublin headquarters of Temu, amid suspicions that the company may have benefited from unfair subsidies from Beijing, Bloomberg News reported.